United States District Court, D. Minnesota
M. Morris, MORRIS & MORRIS, P.S.C., and Laura J.
McKnight, JACKSON LEWIS P.C., for plaintiff.
M. Sharp, SCHAEFER HALLEEN LLC, for defendants.
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF'S
MOTION TO COMPEL ARBITRATION
R. TUNHEIM CHIEF JUDGE UNITED STATES DISTRICT COURT.
Management Registry, Inc. (“MRI”) brought this
diversity action against Defendants A.W. Companies, Inc.
(“A.W.”), Allan and Wendy Brown, and Eric Berg
for events that transpired after MRI acquired numerous
business entities from Mr. Brown. Defendants filed their
Answer and assert counterclaims against MRI. MRI now moves to
compel Mr. Brown to arbitrate three of his counterclaims
against MRI pursuant to the Federal Arbitration Act
(“FAA”), arguing that those three counterclaims
are subject to arbitration under Mr. Brown's employment
agreement with MRI. Because those counterclaims are subject
to a binding arbitration clause, the Court will grant
MRI's motion and order Mr. Brown to arbitrate those
September 2017, MRI acquired several business entities from
Mr. Brown. (First Am. Compl. ¶ 13, Nov. 21, 2017, Docket
No. 59.) Before that acquisition closed, MRI and Mr. Brown
entered into an employment agreement whereby Mr. Brown would
help lead the companies that MRI would acquire. (Id.
¶¶ 16-21, Ex. A.) That employment agreement
contains a mandatory-arbitration clause that provides:
The Company and Executive agree that any dispute that
may arise between them regarding Executive's employment
with Company, or the termination of Executive's
employment with Company, must be submitted for resolution by
binding arbitration in Jefferson County, Kentucky in
accordance with the most current Employment Dispute
Resolution Rules of the American Arbitration Association
(AAA), and judgment upon the award rendered by the Arbitrator
may be entered in any court having jurisdiction thereof. The
arbitration shall be conducted before a neutral arbitrator
selected by both parties from the American Arbitration
Association Labor and Employment Panel, with the parties to
share equally in the costs associated with the arbitration.
(Id. ¶ 16, Ex. A at 8, ¶ 21 (emphasis
the time of the acquisition, there was an understanding that,
after closing, MRI would sell one of the twelve acquired
companies, titled AllStaff Recruiting, Inc.
(“ARI”), to Mr. Brown's wife, Wendy Brown.
(Ans., Affirmative Defenses and Countercls. to First Am.
Compl. (“Answer”) ¶¶ 235-236, 240-244,
Dec. 5, 2017, Docket No. 72.) The sale of ARI to Ms. Brown
never happened, and the parties vigorously dispute both the
lead-up to, and the aftermath of, that never-completed sale.
(Compare Answer ¶¶ 240-243, with
Pl.'s Resp. to Defs.' Countercls. ¶¶
240-243, Dec. 26, 2017, Docket No. 96.) One fact not in
dispute is that Mr. Brown's employment with MRI ended in
October 2017, although the parties dispute whether he
resigned or was fired. (Compare First Am. Compl.
¶¶ 42-43, with Answer ¶¶ 42-43,
brought this action against the Browns, their newly formed
company A.W., and Eric Berg. Mr. Brown asserts counterclaims
against MRI related to his now-terminated employment with
MRI. Specifically, he asserts a counterclaim for breach of
contract (Count II), alleging that MRI fired him without
cause; and counterclaims for common-law fraud (Count VII) and
negligent misrepresentation (Count VIII), alleging that MRI
induced Mr. Brown to enter into the employment agreement with
MRI by falsely representing to Mr. Brown that MRI would sell
ARI to Ms. Brown. (Answer ¶¶ 353-358, 383-399.) MRI
moves to compel Mr. Brown to arbitrate these three
counterclaims, pursuant to the arbitration clause in the
STANDARD OF REVIEW
arbitration agreements, the FAA provides that a party may
petition a district court “for an order directing that
such arbitration proceed in the manner provided for in such
agreement.” 9 U.S.C. § 4. Substantively, the FAA
requires a court to enforce a written arbitration agreement
as it would any other contract. 9 U.S.C. § 2 (“A
written provision . . . to settle by arbitration a
controversy . . . shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract.”).
is a strong federal policy in favor of enforcing arbitration
agreements. Moses H. Cone Mem'l Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 24 (1983). If claims are
arbitrable under the FAA, the claims must be referred to
arbitration, and the judicial proceedings related to the
claims must be stayed pending that arbitration. See
Id. at 20 & n.23; 9 U.S.C. §§ 2, 3. In
determining whether a claim is arbitrable, the court must
first decide whether a valid agreement to arbitrate exists
between the parties, and then ...